Why firms with an ethical rudder will become leaders
Ethics can be a competitive advantage for business success, and companies today need to embrace ways to ensure this is embedded into their DNA.
Companies are finding it harder to gain the trust and loyalty of customers at a time when they actually know more about them than ever before. Why is that? Largely because customers don't feel the companies have earned their trust.
In today's digital world, every online click, like and swipe provides data about user interests, preferences, intent and even location to anyone equipped to collect these data swarms; and the growing ubiquity of location-based sensors, facial recognition, and social and mobile computing has made consumers subject to vast, and lucrative, analyses every day. Unless we throw away every device, turn off the Wi-Fi in our homes and shut the blinds, full white-out privacy simply does not exist.
What can be done to close what IDC calls the "consumer trust divide"? Both governments and enterprises have a part to play. Governments around the world and in Asia have begun introducing data protection legislation with which enterprises will have to comply. However, compliance alone isn't enough. With privacy becoming a grey area and trust getting harder to gain, companies are no longer expected to just get the job done, but they also have to do the right thing.
Legislating good behaviour
Data is highly valued and thus greatly susceptible to being accessed, stolen and misused by unauthorised individuals. The South-east Asian region has seen a rise in the number of cyberattacks over the past few years, with Singapore and Malaysia experiencing their largest data breaches. To address this, governments and industry organisations around the world are enacting regulations to serve as a standard for all companies.
The European Union's General Data Protection Regulation (GDPR) implementation last year was a great start. It encouraged many businesses to build a solid privacy framework and governments to re-evaluate their data privacy laws.
For instance, the Singapore government first introduced the Personal Data Protection Act (PDPA) back in 2012 and early this year, the local Personal Data Protection Commission (PDPC) proposed updating it with a data portability requirement. This update will require firms to have a solid business analytics engine for storing customer data, that can copy files and send them back to customers upon request.
The Hong Kong government recently published a "New Ethical Accountability Framework" prompting businesses to undertake privacy impact assessments similar to that of the GDPR. The regulation also underlined that businesses should not only focus on regulatory requirements, but also hold higher ethical standards that meet stakeholder expectations alongside the laws.
While the push from government agencies will help, legal compliance alone will not be sufficient to earn customers' trust. Customers will still want to see that the companies they share their data with have the internal motivation and framework for conducting business ethically as well.
Starting with a moral compass
Seeing how large corporations were put on the stand for ethical violations in the past year was a wake-up call for everyone that ethics cannot be taken for granted. The massive business impact of the loss of trust is increasingly clear from recent cases - no matter how big or how established the company in question - and statutory compliance does not mean much without a strong ethical core at its foundation.
Ethics can be a competitive advantage for business success, and companies today need to embrace ways to ensure this is embedded into their DNA. Here are some of the ways:
- Make sure that internal processes and policies are driven by a strong ethical framework. To do this, companies may start by codifying a clear set of ethics and baking it into their business models. Many companies have business conduct guidelines today. What is needed is to codify this into processes to make sure that actions of employees reflect the company's underlying principles.
- Appoint a Chief Trust Officer (CTO). Every employee of an organisation has an implicit responsibility for data hygiene and management. However, a CTO would hold explicit responsibility for that, working closely with data protection officers to oversee privacy and customer advocacy. The CTO would also certify that any monetisation of data conforms to ethical guidelines and key performance indicators.
- Rethink how you see industry regulations. Government-mandated regulations are here to stay and thinking of them as an adversary will not help. The law should be seen as a best friend; staying close to the frontline of legislative discussions will let businesses have more influence on the outcome, and constructive (albeit challenging) regulation can in fact fuel their success.
- Don't take trust for granted. Questionable use of data could lead to immense ramifications. It is risky to simply follow regulations without actively devising a strong set of ethics to bolster compliance. Ethics help to fend off distrust and will enable organisations to not just survive, but thrive in this digital climate.
With ethics in place, you can rise to the top
Ethics must remain an enduring component of the digital economy. In a world of exploding data and fading privacy boundaries, businesses that can bolt down a solid ethical framework will be the ones who win customer trust. This is because ultimately, it is customers who will be the best moral guide and determine organisations' long-term success.
- The writer is head of Asia-Pacific and Japan at Cognizant.
Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.